Asian Aluminum Premiums Will Likely Slip, Light Metal Up on the LME

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Premiums for Asian aluminum are set to slip from record highs as China ramps up exports of semi-manufactured products, leaving regional producers searching for buyers for their surplus metal.

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Premiums, the surcharge for obtaining physical metal, have nearly doubled in the past two years outside of China after Western producers cut supply due to years of low prices.

A backlog at London Metal Exchange warehouses and financing demand from Western banks earning profit on stored metal also tightened supply.

Following a two-day decline on the LME, the cash price of primary aluminum climbed up 0.3% to end at $1,802 per metric ton on Friday, February 20. After a couple of days of decreasing prices, the Indian aluminum cash price held steady at INR 112.50 ($1.81). On the LME, the aluminum 3-month price showed little movement last Friday, hovering around $1,820 per metric ton.

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Chinese aluminum prices closed flat for the day. For the fifth consecutive day, the price of Chinese aluminum scrap held flat at CNY 12,500 ($1,998) per metric ton. The price of Chinese aluminum billet saw little movement at CNY 12,940 ($2,068) per metric ton. The price of Chinese aluminum bar showed little movement last Friday at CNY 13,700 ($2,190) per metric ton. The cash price of Chinese aluminum remained essentially flat at CNY 12,910 ($2,064) per metric ton.

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